DATE: June 4, 2024
TO: Honorable Mayor and City Council
FROM: Henry Chen, Interim Administrative Services Director
SUBJECT: RESOLUTION NO. 7575 ESTABLISHING AN APPROPRIATION LIMIT FOR FISCAL YEAR 2024-25 PURSUANT TO ARTICLE XIII -B OF THE
CALIFORNIA CONSTITUTION
CEQA: Not a Project
Recommendation: Adopt
SUMMARY
Article XIII-B of the State Constitution imposes a limit (the GANN “Limit”) on tax proceeds that can be appropriated for expenditures in any given fiscal year. Section 7910 requires the City of Arcadia (“City”) to establish the L imit by resolution. As calculated, the City’s expenditures subject to the limit are $71,496,400 versus a limit of $116,093,338, meaning that the City is under the G ANN Limit by $ 44,596,938. It is recommended that the City Council adopt Resolution No. 7575 establishing the annual adjustment factors and the resulting Appropriation Limit for the Fiscal Year 2024-25.
DISCUSSION
In November 1979, the voters of the State of California approved Proposition 4, commonly known as the G ANN Initiative. This proposition created Article XIII -B of the State Constitution placing limits on the amount of revenue that can be spent by any c ity government. Each government was allocated a base year L imit, which is adjusted annually for inflation and population growth. The law also requires an annual review of the Limit calculation.
Certain revenues do not count toward the annual G ANN Limit. For instance, the expenditure of tax proceeds on voter-approved debt and the costs of complying with Court orders and Federal mandates are not counted as they are restricted for certain purposes.
Similarly, if the State specifies that funds transmitted to cities are restricted in their use (e.g., State Gas Tax), they are excluded in the calculation of the City’s GANN Limit.
Resolution No. 7575 Establishing an Appropriation Limit for Fiscal Year 2024-25
June 4, 2024
To measure inflation, each City may choose the greater of the two: growth in the California Per Capita Income, or the growth in the non -residential assessed valuation due to new construction within the City. At the present time, the data necessary to calculate the increase in the non-residential assessed valuation is not available from the Los Angeles County Assessor. Thus, the change of California Per Capita Income at 3.62% has been used as the inflationary adjustment factor in the calculation of the Appropriation Limit.
The second factor for calculating the Limit is the change in population. Cities may choose the greater of th e population growth within the C ounty of Los Angeles (County) or their jurisdictional boundaries. In Los Angeles County, the estimated population growth rate was 0.05%, Arcadia’s estimated population growth rate was -0.13% in 2024. As a result, the City has chosen to use the C ounty’s growth factor for calculating the FY 2024-25 GANN Limit.
The attached E xhibits “A”, “A-1”, “B”, “C”, “C-1”, and “D”, demonstrate the City’s compliance with Article XIII -B of the State Constitution for the F iscal Year ending June 30, 2025. As calculated, the City’s Proceeds of Taxes B efore Exclusions is established at $72,084,500 (Exhibit “C”), and the FY2024-2025 Appropriation Limit is $116,093,338 (Exhibit “A”). Exhibit “B” shows that the City of Arcadia is under the A ppropriation Limit by $44,596,938.
ENVIRONMENTAL ANALYSIS
The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), and it can be seen with certainty that it will have no impact on the environment.
FISCAL IMPACT
The GANN Limit for the City of Arcadia in FY 202 4-25 is established at $1 16,093,338.
The appropriations subjected to the limit in the annual budget are $71,496,400, which are well within the Limit. Therefore, the City may fully expend all funds appropriated in the FY 2024-25 Budget and has room for additional appropriations during the year as necessary.
RECOMMENDATION
It is recommended that the City Council find this action does not constitute a project under the California Environmental Quality Act (“CEQA”); and a dopt Resolution No. 7575 establishing an appropriation limit for Fiscal Year 2024-25 pursuant to Article XIII-B of the California Constitution.
Resolution No. 7575 Establishing an Appropriation Limit for Fiscal Year 2024-25
June 4, 2024
Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2024-25 Exhibit “A-1” - Population/Inflationary Adjustment
Exhibit “B” - Appropriations Subject to Limitation
Exhibit “C” - Calculation of Proceeds
Exhibit “C-1” - Interest Earnings produced by Taxes
Exhibit “D” - Exclusions
Resolution No. 7575
EXHIBIT "A"
AMOUNT
A. LAST YEAR'S LIMIT (2023‐2024) 111,983,542$
B. ADJUSTMENT FACTORS:
CITY OF ARCADIA POPULATION GROWTH 1.0005
PER CAPITA COST OF LIVING CHANGE AS A RATIO 1.0362
TOTAL ADJUSTMENT 1.0367
C. ANNUAL ADJUSTMENT 4,109,796
D. FISCAL 2024‐2025 LIMIT 116,093,338$
CITY OF ARCADIA
APPROPRIATIONS LIMIT
FISCAL YEAR 2024‐2025
EXHIBIT "A‐1"
AMOUNT
PERCENTAGE CHANGE IN PER CAPITA PERSONAL INCOME 3.62%
POPULATION GROWTH ‐ LOS ANGELES COUNTY 0.05%
POPULATION GROWTH ‐ CITY OF ARCADIA ‐0.13%
SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA
CITY OF ARCADIA
POPULATION/COST OF LIVING ADJUSTMENT
FISCAL YEAR 2024‐2025
EXHIBIT "B"
AMOUNT SOURCE
A. PROCEEDS OF TAXES GRAND TOTAL 72,084,500$ EXHIBIT C B. EXCLUSIONS (MEDICARE TAX) (588,100) EXHIBIT D C. APPROPRIATIONS SUBJECT TO LIMITATION 71,496,400$
D. FISCAL 2024‐2025 LIMIT 116,093,338 EXHIBIT A
E. OVER/(UNDER) LIMIT (44,596,938)$
CITY OF ARCADIA
APPROPRIATIONS SUBJECT TO LIMITATION
FISCAL YEAR 2024‐2025
EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
Property Tax 19,851,100$ ‐ $ 19,851,100$
Public Safety Augmentation 671,400 ‐ 671,400 Sales & Use Tax 24,228,700 ‐ 24,228,700
Tra ns ient Occupancy Tax 5,894,400 ‐ 5,894,400 Property Tra ns fer Tax 551,200 ‐ 551,200
Utility Users Tax 9,190,300 ‐ 9,190,300
Business License Tax 1,372,600 50,000 1,422,600 TOTAL TAXES 61,759,700$ 50,000$ 61,809,700$ FROM STATE
Motor Vehicle In Lieu 9,232,800$ ‐$ 9,232,800$
Gasoline Ta x ‐ 1,552,200 1,552,200
Road Maint./Rehabilitation (SB1) ‐ 1,456,100 1,456,100 Homeowner's Exemption 70,000 ‐ 70,000
POST ‐ 5,000 5,000
SB 90 Reimbursements ‐ 10,000 10,000
TOTAL FROM STATE 9,302,800$ 3,023,300$ 12,326,100$ OTHER GOVERNMENTS
Community Development (CDBG) ‐$ ‐$ ‐$
Citizens Options for Public Safety ‐ 170,000 170,000 Homeland Security ‐ ‐ ‐
OTS Grant ‐ ‐ ‐
Other (PROP A&C) Ta xes ‐ 2,856,400 2,856,400 Prop A Park Ma int. & Services ‐ ‐ ‐
Mea s ure R ‐ 971,200 971,200
Mea s ure M ‐ 1,100,700 1,100,700
Used Oil Grant ‐ 8,000 8,000
Beverage Container Recycling Grant ‐ 14,200 14,200 AQMD (AB2766) ‐ 73,800 73,800
TOTAL OTHER GOVERNMENTS ‐$ 5,194,300$ 5,194,300$ CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2024 ‐2025
EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2024 ‐2025
LOCALLY RAISED
LICENSES AND PERMITS
Franchise Fee ‐$ 1,132,000$ 1,132,000$
Parking Permits ‐ 610,400 610,400
Plan Check Fees ‐ 1,200,000 1,200,000
Building Permits ‐ 1,090,000 1,090,000
M echanical, Electrica l & Plumbing ‐ 400,000 400,000 Home Occupation Permits ‐ 9,300 9,300 Miscellaneous Permits ‐ 8,200 8,200 Planning Applications ‐ 350,600 350,600 Fire Plan Check ‐ 180,000 180,000
Engineering Permit Fees ‐ 160,000 160,000 Fire Code Permit Fees ‐ 160,000 160,000 Fire Code Inspections ‐ 80,000 80,000 Off‐site Improvement ‐ 24,000 24,000 Water Landscape Review ‐ 65,000 65,000 Technology Fee ‐ 255,000 255,000
Unoccupied Residences ‐ ‐ ‐
Storm Water Plan Check Fees ‐ 4,300 4,300 SB1473 building Permit ‐ 500 500
PEG ‐ 70,000 70,000
Charges for Current Service ‐ 4,721,300 4,721,300 Recreation Activities ‐ 1,468,900 1,468,900
Library Charges ‐ 112,000 112,000
Rent & Royalty ‐ 1,380,000 1,380,000
Transportation Impact fees ‐ 300,000 300,000 Solid Waste A ssessments ‐ 585,000 585,000 Park/Dwelling Unit Fees ‐ 875,000 875,000 TOTAL LICENSES & PERMITS ‐$ 15,241,500$ 15,241,500$ EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2024 ‐2025
FINES & PENALTIES
Miscellaneous Fines ‐$ 10,400$ 10,400$ Parking Citations ‐ 470,000 470,000
Code Violations ‐ 20,000 20,000
Fire Citations ‐ 500 500
TOTAL FINES & PENALTIES ‐$ 500,900$ 500,900$ OTHER REVENUE
Parimutual Receipts 290,000$ ‐$ 290,000$
Admin. O/H Tra ns it ‐ 138,600 138,600
Admin. O/H Water ‐ 1,496,000 1,496,000
Admin. O/H Sewer ‐ 282,800 282,800
Admin. O/H Lighting District ‐ 120,700 120,700 Admin. O/H Redevelopment ‐ ‐ ‐
Court A ppearances ‐ 5,000 5,000
Waste Management Admin. Fees ‐ 130,000 130,000 TOTAL OTHER REVENUE 290,000$ 2,173,100$ 2,463,100$ Tota l Estimated Revenues
Before Revenue from Use of Money 71,352,500$ 26,183,100$ 97,535,600$ Revenue Ea rned from Use of Money
Ea rned on Non‐Proceeds ‐$ 639,700$ 639,700$ of Ta xes : Funds 104, 107, 112, 114, 118
142, 151, 153, 155, 156, 157, 161, 165
Proceeds of Ta xes : Fund 302 ‐ 416,600 ‐ General Fund 732,000 268,000 1,000,000 TOTAL REVENUE EARNED
FROM USE OF MONEY 732,000$ 1,324,300$ 1,639,700$ GRAND TOTAL 72,084,500$ 27,507,400$ 99,175,300$
EXHIBIT "C‐1"
AMOUNT
PROCEEDS OF TAXES (EXCLUDING INTEREST) 71,352,500$
TOTAL REVENUE (EXCLUDING INTEREST) 97,535,600$
PERCENT APPLICABLE TO PROCEEDS OF TAXES 73.20%
TOTAL INTEREST BUDGETED FOR GENERAL FUND 1,000,000$
INTEREST APPLICABLE TO PROCEEDS OF TAXES 73.20% 732,000$ INTEREST APPLICABLE TO NON‐PROCEEDS OF TAXES 26.80% 268,000$ INTEREST DRIECTLY IDENTIFIED TO THE FUNDS WHICH REVENUES ARE IDENTIFIED AS NON PROCEEDS OF TAXES ‐ FUND 104, 107, 112, 114, 118, 142, 151, 153, 155, 156, 157, 161, 165 639,700$ INTEREST DIRECTLY IDENTIFIED TO FUNDS WHICH REVENUES ARE IDENTIFIED AS PROCEEDS OF TAXES ‐ FUND 302 ‐$
CITY OF ARCADIA
INTEREST EARNINGS PRODUCED BY TAXES
FISCAL YEAR 2024‐2025
EXHIBIT "D"
FEDERAL MANDATED COSTS:
MEDICARE TAX 588,100$
CITY OF ARCADIA
EXCLUSIONS
FISCAL YEAR 2024‐2025